SAN JUAN, Puerto Rico (AP) \u2014 A private company on Tuesday took over the transmission and distribution operations of Puerto Rico\u2019s power authority, which has struggled with blackouts and bankruptcy, corruption and mismanagement.<\/p>\n
The takeover by Luma Energy under a 15-year contract coincided with the beginning of the Atlantic hurricane season, with many across Puerto Rico worried about the transition and whether the new company can handle a severe storm. The U.S. territory is still struggling to recover from Hurricane Maria, which destroyed most of the power grid in September 2017.<\/p>\n
\u201cIt is extraordinarily fragile and in very poor condition,\u201d warned Wayne Stensby, CEO of Luma, a consortium made up of Calgary, Alberta-based Atco and Quanta Services Inc. of Houston.<\/p>\n
However, Stensby said the company, which will serve all of the island\u2019s roughly 1.5 million clients, has enough resources to handle a Category 2 hurricane and can bring in more equipment and workers if a stronger storm hits.<\/p>\n
The agreement approved by the territory\u2019s government and a federal control board calls for Luma to spend billions of dollars in upgrading the battered system \u2014 with most of that money coming from the U.S. Federal Emergency Management Agency \u2014 while receiving hundreds of millions of dollars for managing the system.<\/p>\n
Officials are betting the private operator can do better than the island\u2019s Electric Power Authority, which has struggled to restore the storm-battered electrical grid and keep power flowing while trying to cope with $9 billion in debt \u2014 more than that of any other government agency in Puerto Rico.<\/p>\n
Even with privatization, most analysts expect the government and control board will be forced to agree to an eventual power rate increase to meet the demands of bondholders.<\/p>\n
Meanwhile, the new company will inherit unresolved blackouts, with more than 30,000 customers left without power in recent weeks.<\/p>\n
\u201cWe don\u2019t wish to go into June 1 with a large backlog of outages, but it\u2019s going to be what it\u2019s going to be,\u201d Stensby said.<\/p>\n
Puerto Rico chose Luma in June 2020 to operate and modernize the island\u2019s transmission and distribution system.<\/p>\n
Gov. Pedro Pierluisi said the company has pledged to reduce power interruptions by 30%, the length of outages by 40% and cut workplace accidents by 50%.<\/p>\n
\u201cWe\u2019ve had a bankrupt … (and) incompetent public utility for too long,\u201d he said. \u201cThe transformation that is underway will make a difference.\u201d<\/p>\n
But critics have called on the government to cancel the deal. A Texas-based nonprofit, the Institute for Energy Economics and Financial Analysis, complained that Luma would not be penalized for failing to save money or meet renewable energy goals.<\/p>\n
It said the control board \u201cis turning a blind eye to some of the same fiscal practices that led the commonwealth into bankruptcy,\u201d wrote Tom Sanzillo, the nonprofit\u2019s director of financial analysis. \u201cThese include politically driven contracting processes, poorly documented cash transfers between commonwealth entities, lack of clarity and accountability for budgetary savings initiatives, failure to prioritize renewable energy and costly and shortsighted labor management.\u201d<\/p>\n
The Puerto Rico-based Center for a New Economy, a nonpartisan think tank, also criticized the deal, saying, \u201cThere are no guarantees that the process to modernize and transform (the electric authority) will be successful.\u201d<\/p>\n
In addition, some 20 unions representing thousands of Puerto Rican workers ranging from teachers to truck drivers announced on Tuesday that they would go on strike if the Luma contract is not rescinded.<\/p>\n
Stensby, Luma\u2019s CEO, said he was perplexed by that development: \u201cWhat are they fighting against? … How can you fight against better customers service and better electricity?\u201d<\/p>\n
Meanwhile, the federal board said the effort must go forward. If the Electric Power Authority is not transformed, the economy will shrink, said David Skeel, the board\u2019s chairman.<\/p>\n
\u201cSome people are not happy with it, but it is the way forward,\u201d he said of the contract. \u201cIt is absolutely essential, in my view.\u201d<\/p>\n
Puerto Rico\u2019s power generation units average 45 years old, twice those of the U.S. mainland, and a fiscal plan approved by the federal board foresees Luma spending some $3.85 billion through fiscal year 2024 to revamp the grid\u2019s transmission and distribution system.<\/p>\n
Source: AP News, 2021 (www.apnews.com)<\/p>\n","protected":false},"excerpt":{"rendered":"
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